Author: Nancy, PANews
As the secondary market sentiment gradually warms up, the crypto ecosystem is undergoing subtle changes, with market liquidity gradually shifting away from on-chain activities. In the bull market atmosphere, many projects are accelerating their pace and launching their own tokens in an attempt to attract more capital and user attention. At the same time, the strong performance of crypto projects in various sectors has further fueled investment sentiment, and the market's expectation for the "Altcoin season" is growing stronger, with many beginning to search for potential crypto assets.
DeFi and L1 are the main forces for token issuance, and token distribution strategies are undergoing optimization adjustments
Over the past period, the crypto market has seen a series of projects announce the issuance of tokens. PANews has compiled statistics on 21 crypto projects that have recently announced their TGEs, covering sectors such as DeFi, L1, Non-Fungible Token, L2, and DAO, with DeFi and L1 projects being the main forces for token issuance, accounting for nearly half of the projects.
Based on public information, these projects have generally received the favor of the capital market, with a total financing amount exceeding $620 million, involving investors such as Polychain, Binance Labs, Coinbase Ventures, Dragonfly, Wintermute, Alliance DAO, GSR, and DeFiance Capital. VC endorsement is often seen as an important symbol of project reliability and potential, and can add more credibility and potential to these projects.
However, with the involvement of capital, the problem of continuous price declines due to high FDV and low liquidity that plagued these projects previously has also gradually aroused strong dissatisfaction and controversy in the market. Faced with this dilemma, the market's attention has begun to shift significantly, including turning to relatively fair and decentralized crypto assets such as MEME coins. For example, 10x Research recently released a report stating that the Google search trend for "Meme Coins" has hit a new high, surpassing the previous peak in March 2024. This data also indirectly confirms that investors are currently relatively more inclined towards investment opportunities that are community-driven and more equitable.
In terms of token distribution, many projects have begun to adjust the problem of low initial liquidity, in order to avoid the predicament of limited sustainable upside space caused by high FDV. For example, Movement's initial liquidity reached 22%, Side Protocol's was 22.9%, and Zircuit's was 21.95%. This change reflects the market's reflection on the low liquidity and high FDV model, especially in these projects, where ordinary investors often become the "sacrifices" of liquidity withdrawal.
Furthermore, token distribution strategies are also more focused on ecosystem building and community participation. For example, Bluefin will use 52% of the total token supply for ecosystem growth, Movement will allocate 40% of the total token supply to the ecosystem and community, Magic Eden will allocate 37.7% of the total token supply to the community and ecosystem, and Usual will allocate 90% of the tokens to the community. Such strategies can help enhance the community cohesion and market competitiveness of the project, and better promote the long-term development of the project.
Particularly in terms of airdrops, the average token airdrop ratio of these 21 projects reached 14.9%, with Suilend, Hyperliquid, Zircuit, Swan Chain, and WalletConnect reaching 40%, 31%, 21%, 20%, and 18.5% respectively, significantly exceeding the average, especially Hyperliquid, with an airdrop value of up to $28,500 per person, becoming one of the largest crypto airdrops this year. Airdrops, as an effective means of attracting and incentivizing community members, still play an important role in project promotion, not only providing generous returns for early supporters, but also effectively enhancing the project's influence and visibility.
Multiple factors may help the return of the Altcoin season, but cannot rely solely on the driving effect of Bitcoin
The intensive announcement of token issuance by crypto projects is closely related to the market rebound and the relaxed policy environment in the US. Recently, with the continued rise of Bitcoin, mainstream public chains, DeFi, metaverse, L2, and gaming sectors have seen a strong rebound. At the same time, the intensified PVP competition in the MEME market has also discouraged many players, and the market's attention is gradually shifting to the secondary market.
"The Altcoin season may be about to begin," top trader Eugene said recently.
According to the latest report released by Bitfinex, the overall crypto market has reached a new cycle high, and the market capitalization of Altcoins is now also approaching the $984 billion high point of May 2021, indicating that speculative capital is shifting from Bitcoin to Altcoins. Historically, such capital rotation usually signals the arrival of the "Altcoin season", where Altcoins outperform Bitcoin in terms of price gains. Crypto analyst Mikybull Crypto said that Bitcoin's dominance in the crypto market has fallen below its two-year support line, which may indicate that the market has "officially entered the Altcoin season". This is because the decline in Bitcoin's dominance means that investors are taking profits from their BTC positions and allocating some of the funds to Altcoins.
QCP also pointed out that the recent decline in Bitcoin's market capitalization share reflects a trend of capital gradually shifting from BTC to ETH and other Altcoins. According to data disclosed by IntoTheBlock, the net outflow of stablecoins from CEX reached the highest level since April in November, about $4.5 billion. Combined with the strong price performance, this indicates that traders are locking in profits, and these funds may be redeployed to Altcoins or held as a reserve to cope with future declines.
Furthermore, as the crypto market gradually moves towards the mainstream, the relaxed crypto policy environment in the US has also boosted the market's optimism about the overall development of the Altcoin sector and the industry as a whole. According to a previous report by PANews, the list of members of the new Trump administration has been gradually unveiled, and many of them have openly expressed a friendly attitude towards cryptocurrencies, which may bring more positive policy expectations for the industry. Particularly, the upcoming departure of SEC Chairman Gary Gensler is seen as a change that may provide more space for the further development of the crypto industry. It is also worth mentioning that the market's anticipation is rising with the ETF applications of coins such as Solana, XRP, and LTC.
However, Ki Young Ju, CEO of CryptoQuant, also pointed out that compared to the previous bull market, the current Bitcoin rally is mainly driven by institutional investors and spot ETF demand, and these funds are different from crypto exchange users and have no intention of shifting assets from Bitcoin to Altcoins. At the same time, since institutional investors mainly operate outside of exchanges, asset rotation becomes less likely. Although institutions may allocate to mainstream Altcoins through investment tools like ETFs, small-cap Altcoins still rely on exchange retail users. For the total Altcoin market capitalization to reach a new high, a large influx of new capital into exchanges is needed, but the current level is still below the historical high, indicating a decrease in liquidity brought by new users. Therefore, Altcoin projects should focus on developing independent strategies to attract new capital, rather than relying solely on the momentum generated by Bitcoin.
